Transferring your ISA can be a good way to make the most of your savings, allowing you to keep on top of the latest bonus rates and deals.
Why transfer a cash ISA?
By transferring your money when your current rate drops, you can take advantage of new offers on ISAs, and avoid taking the hit from a drop in rates when bonus periods come to an end.
Why transfer an investment ISA?
You may be unhappy with the performance of your existing investment ISA, or your objectives may have changed. By transferring your existing investment ISA to a new provider, you can find a deal that is better suited to your investment objectives without losing valuable tax benefits.
The ISA transfer process
Transferring an ISA from one provider to another is a fairly straightforward process, which should take no longer than 15 working days. The procedure is very similar for both cash ISAs and investment ISAs:
- First, you will need to compare different ISA providers to find a deal that suits you.
- Once you have found an attractive ISA deal, you’ll need to complete a ISA transfer authority form (this will be included in the new provider application pack) as well as a ISA application form.
- Your existing ISA provider may contact you to confirm the transfer request and to obtain any additional information needed to complete the transfer. Once this is organised, they will send the funds to the new ISA provider.
- If the new ISA provider has not received a response from the old ISA provider after 11 working days, they will contact them for an explanation. If there is a delay to the transfer you should be given a timescale for this to be resolved.
- Once the new ISA provider receives the funds, they will be credited to your ISA account and interest will be backdated to the first day where interest no longer accrues on the funds being transferred from your old ISA.
The rules of ISA transfers
So, you’ve decided to switch ISA providers for a better deal – but before you start, it’s a good idea to familiarise yourself with some of the regulations surrounding ISA transfers:
- Don’t just withdraw the money, or you’ll immediately lose all the tax benefits.
- Remember that you can transfer a cash ISA into an investment ISA, but not vice versa.
- Be aware that you may be charged for transferring your ISA. While instant and easy access cash ISA transfers tend to be free, this is not true for all ISA types. With fixed rate cash ISAs, you may lose a set amount of interest, while charges for transferring investment ISAs may be higher. Always check with your existing provider before instigating the transfer process to make sure that you’re aware of any hidden costs.
- As with all savings and investment decision, If you are at all unsure about transferring your ISA we suggest that you seek independent financial advice.